What I thought was, “It depends. How lucky do you feel?”

What I said was, “I recommend you plan like a pessimist so you can live like an optimist.” 

Here’s why I answered that way: When we expect life to always go according to our plans, we invariably end up frustrated and wishing we’d planned differently.

However, when we’re a bit “pessimistic in our planning, we’re less surprised and better prepared for bumps in the road. By planning for potential negative scenarios, we increase our chances for a better outcome. 

So, back to our question: Should older folks considered long-term care insurance?

That prompts another question, “If you had to go into a nursing home, how would you pay the bill?” 

If your only financial resources are a monthly check from Social Security, the tab would likely be paid by Medicaid. (Medicare only pays after you’ve spent a certain amount of time in the hospital.) 

But what if you’re in that group of folks who have worked and accumulated a nest egg? Unless you want to see those assets quickly depleted, you should think hard about long-term care insurance.

According to the current Cost of Care Survey by Genworth Financial, the cost of a semi-private nursing home room in north Louisiana is $64,605. For a private room, the cost is $75,190. (NOTE: By 2031, those figures are expected to rise to $86,824 and $101,049, respectively.)

At that rate, how long would it take to exhaust your savings? Perhaps not long.

“But,” you say, “Isn’t long-term care insurance prohibitively expensive?” 

Recently I saw a long-term care policy for a 65-year-old quoted at around $6,000 a year. 

That’s a lot of money. Is it even doable for most people?

Well, suppose you had a $500,000 nest egg. Simple math tells you that, at current prices, seven years in a nursing home would burn through every penny of that. 

But think again about the long-term care insurance option. At $12,000 a year (a policy for two), that’s only 2.5% of your nest egg.

And since interest rates have risen above that, it’s possible you could pay your long-term care premiums out of your nest egg and never touch the principle. 

That’s not the only interesting option for funding long-term care insurance. 

If, for example, you’re willing to let an insurance company hold some of your money in a single premium whole life policy, you might not have to pay any premiums at all. (They use the float on your money to finance the long-term care insurance and even give you a little return on your money.) 

And if you never had to spend that money on long-term care, your heirs could receive it tax-free as a life insurance death benefit. For those who have the means, this is an intriguing option.

Obviously, when it comes to paying for long-term care insurance, no single answer is best for everyone. So, you’ll definitely want to discuss all your options with a knowledgeable, licensed agent. 

In the meantime, just remember…a little pessimism during your retirement planning can lead to a much more optimistic outcome in your retirement living.

And—last thing–if all this talk of nest eggs, long-term care insurance, and having enough income in retirement has you tossing and turning, email me at bmoore@argentadvisors.com. 

I’ll send you a link to take the RISA^® Profile. (RISA^® stands for Retirement Income Style Awareness^®.) This quick and ingenious quiz is FREE, and it can help you create a retirement income plan that makes fiscal sense for you.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

Keep reading only if: (a) you’re convinced the economy will be bad for a while; and (b) because of that belief, you’ve put a halt to investing and all other financial moves.

I understand why you feel cautious. I get wanting to be safe and watch from the sidelines.

But the choice to do nothing is problematic for at least two reasons.

One, nobody can say with certainty when the current gloom will give rise to the next boom. Sitting out can mean missing out.

Two, investing is only one facet of your total financial life. Even in gloomy times, there are other financial moves you can make while you are “waiting” for the economy to get better. 

Let me give you two.

• Stop procrastinating your PROTECTION.

What would happen if you: (1) died prematurely; (2) became disabled; or (3) needed long-term nursing home care? 

Whew, that’s a depressing list, isn’t it?

Which is precisely my point. Because these kinds of real-life scenarios are so unpleasant to think about, it’s easier to not think about them. We put them off.

Don’t do that. Just because the stock market isn’t soaring like you wish it would doesn’t mean you get exempted from a crisis potentially crashing into your life. 

While the market languishes, work with a professional and get a reasonable level of financial protection around yourself—and your family.

That’s a smart financial move for gloomy times. Here’s one more

• Start accelerating your THRIFT. 

“Thrift” is a word we don’t use much anymore. It implies financially carefulness. It’s being frugal with money—the opposite of a “spendthrift.”

It used to be a high compliment if someone called you “thrifty.” Today? Not so much. Frugal people get called “tight” or “cheap.” (Ask yourself: Would I rather be “cool” or “financially healthy”?)

Thrift starts with an attitude. You give thoughtful consideration to how you handle money. You ask questions like:

• What is really most important to me, given that my resources (income) are limited? 
• Since I can’t have it all, what’s more important—getting a new vehicle with all the bells and whistles…or moving a step closer to financial freedom and independence?

The road to bankruptcy court—to update the old saying—is paved with good intentions. And so, it’s critical to move down the thrift continuum from attitude to behavior. 

The goal is a thrifty mental attitude that results in consistent thrifty habits. 

That means things like: saving first, thinking before spending, putting away (and paying down) those credit cards, and seeking advice and counsel in the financial areas where you lack knowledge. 

Let’s suppose this economic mess we’re in lasts for a while—perhaps even years. (I’m not predicting; I’m simply making a point.) 

In that case, ask yourself two questions:

• Would I be better off sitting on my hands and grumbling about how bad things are? Or…
• Would my time, energy, attention (and money!) be better spent doing what I can with what I have? 

Then make these two smart moves:

• Improve your protection. 
• Increase your thrift. 

Is the question of retirement income one of the things that’s got you feeling gloomy? Email me at bmoore@argentadvisors.com. I’ll send you a free link to take the RISA^® Profile. This simple quiz takes mere minutes, and it can save you a LOT of worry down the road.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

There’s a lot to like about the mindset that says, “Don’t sweat the small stuff.”

When we obsess over little matters, we often miss the big, important things in life.

On the other hand, don’t you want the doctor who does your heart surgery to be off the charts when it comes to little details? Personally, just before my anesthesia kicks in, I want to look up and see my surgeon’s furrowed brow so I can be sure he or she is “sweating the small stuff.” 

This same tension exists in your financial life. 

Wisdom urges us to focus on big issues like:

• Insurance…so that if something happens to you, you family is taken care of
• Investing…to make sure that you accumulate and grow enough wealth so that when you quit working, you can worry less and live more
• Impact…taking care to ensure you’ve got a plan in place to pass on all the assets you’ve accumulated to the people and causes nearest and dearest to your heart

Once these big financial matters are handled, we then have to sweat the small stuff. Because financial matters involve countless little details

Take Joe, for example. He was diagnosed with cancer in his late fifties. The good news is that Joe entered treatment early. He’s in remission today. 

The bad news is that even though Joe had medical insurance, he wasn’t aware of certain details in his coverage.

Like the fact that the policy he switched to—because it cost less than his old one—had a cap on the amount of chemotherapy it would pay for. 

You guessed it. Joe’s chemo bill skyrocketed. Today he has a six-figure medical indebtedness that threatens to take him under financially. 

Another pesky detail Joe discovered? A little rule about taxes on disability insurance payments. This rule stipulates that if you treat your disability insurance premium as a business expense and deduct those payments, you’ll have to pay taxes on any benefits paid to you. Only those who forgo a tax deduction can receive disability payments tax-free.

Now that Joe is receiving monthly disability benefits, do you think he wishes those payments were tax free? Sadly, he didn’t pay attention to that “small detail.”

And then there’s the guy I met 20+ years ago. He had heard that the XYZ mutual fund was a hot investment. (Yes, in the 90s, the words “mutual fund” and “hot” were often used in the same sentence.) He couldn’t send the company a check fast enough. 

For months he watched the fund rack up huge gains. Yet each time he got his statement, he noted that his account was barely growing.

When he finally came to see me, I looked at his statement and saw the problem: He hadn’t put his money into the XYZ Mutual Fund, but a money market fund owned by XYZ investment group. 

He had failed to pay attention to the details.

Here’s my advice: Focus on the big things…AND start sweating the small stuff.

Because the small stuff is often a big deal indeed.

One last note…I meet people all the time (especially those in their late 50s, early 60s), who have done the big thing of accumulating assets for retirement; however, they haven’t addressed the small but important detail of “How are we going to turn our ‘nest egg’ into regular monthly living expenses?”

If you’re one of those people, you’d benefit greatly from taking the RISA® (i.e., the Retirement Income Style Awareness®) Profile. Email me at bmoore@argentadvisors.com, and I’ll send you a free link where you can take this eye-opening self-test and find out what kind of retirement income plan best aligns with your personality.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

Small, family-owned businesses are the engine of growth and job creation in this country. Therefore, it’s in everyone’s best interest to see them thrive.

Unfortunately, about 70% not only don’t thrive—they don’t survive past the first generation! Fully 95% fail to make it beyond the second generation.

This failure of family-owned businesses to succeed beyond the first generation is often a money thing. It involves a shortage of dollars.

Consultant Russ Allen Prince conducted a study of 749 heirs of failed family businesses. He found that family business failure is more often associated with inadequate estate planning than poor succession planning.

In other words, he argues that it’s often more of a money problem than a management issue.

He’s got a point. Every savvy business person knows that a thriving business can go under when there’s a lack of cash. In the same way that if you cut off the oxygen flow of a healthy person, you suddenly have a dead person…if you cut off the cash flow of a vibrant family-owned business, you’ll soon have a family business failure.

The usual tools to overcome the dollar crunch that occurs at succession time are:

• Properly drafted legal documents
• Trusts 
• Life insurance (Since death usually comes at the most inconvenient time, life insurance is often key to making small business transitions secure.)

But even when the “dollar” hurdle is successfully crossed, there’s often a second problem—direction. 

Linda Davis Taylor, an advisor to family businesses, makes this point by asking this question, “On a voyage over turbulent waters, should you build a better boat or train a better captain?”

Davis encourages family business owners to see their wealth in four different forms: human capital, intellectual capital, social capital, and financial capital. 

If you’re serious about seeing your family business prosper under the leadership of the next generation, you’ve got to focus on the human capital.

Ask yourself one question: If I devoted the same amount of time, energy and attention to my business operations as I’m spending in developing the next owner(s) of my business (i.e., your children or heirs), how successful would my business be?

Yes, yes, I know that being a business owner requires you to wear a number of hats. You have a lot of demands on your energy and attention—and not a lot of time. 

But can you imagine having a machine that’s central to your business’s success, and totally ignoring the maintenance of that machine? 

Don’t ignore the development and training of the next generation of your business’s owners. When you fail to plan, you plan for failure.

Speaking of planning, I bet you’ve got a retirement portfolio. What’s your plan for turning those “nest egg” assets into monthly living expenses once you stop drawing a paycheck? Do you have one?

If you do, does that plan really align with your “financial personality”? If not, I’ve got a free gift for you. Email me at bmoore@argentadvisors.com and I’ll send you a link to take the RISA® (Retirement Income Style Awareness®) Profile. There’s no charge. It only takes a few minutes, and it can save you LOTS of worry. 

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

“Do I really need disability insurance? I mean, I have a desk job, and as long as I have my mind, I can always do my work, right? Besides, wouldn’t my employer’s workers’ compensation insurance take care of my basic needs if something happened to me?”

Let’s take those questions one a time.

• “Do I really need disability insurance?”

If you are suddenly unable to work for medical reasons, and you are not (yet) independently wealthy, you need disability insurance to provide income. The bills don’t stop just because you can’t work. And you’ll likely have extra medical bills too.

Did you know the Kaiser Family Foundation found that in 2015 medical bills were the reason a million adults declared bankruptcy?

So, yes to the first question.

• “As long as I have my mind, I can always work, right?”

I’ve heard this line for years. It’s always said by someone who has never been severely ill or injured.

If that’s you, thank God for your good fortune. But to help you get in touch with how being disabled might affect your mind, try this thought experiment: Imagine what would happen to your ability to focus if you took a sledgehammer and gave your index finger a good, hard whack? Or do this: Set your alarm clock for 2 a.m. three days in a row. Then, on minimal sleep, try to solve a really tough work problem.

Pain and fatigue have a way of short-circuiting our best cognitive skills. So, no to the “as long as I have my mind, I can always work” statement. If you are physically disabled, that may be the case, but it is by no means a certainty.

Many think of being disabled as “suffering a freak accident that results in paralysis.” That’s the exception, not the rule.

According to the Council for Disability Awareness, the majority of long-term disabilities are due to common illnesses like cancer, heart attack, or diabetes. Back pain, injuries, and arthritis are also significant causes. This is the stuff of long-term, persistent pain and/or fatigue.

And get this: Statistics tell us that one in five workers—before the age of 65—will miss work for at least a year due to a disability.

• “Wouldn’t my employer’s workers’ compensation insurance take care of me if I were injured?”

About 90% of disabilities are not work-related. Therefore, they are not covered by workers’ compensation. Only a disability caused by or related to your work will be covered by workers’ comp. Just because you “work somewhere” doesn’t mean workers comp will cover you.

Social Security might pay something in the event of your disability. However, according to USA Facts, only 38% of those filing for SSDI benefits are accepted. And only half of those rejected applicants win their appeals.

And even if you do meet the qualifications, the average monthly benefit paid by Social Security is $1,358 a month. You likely need more than that.

Insurance is all about transferring risk away from you by accepting a small loss (the premium) to avoid the potential for a disastrously large loss (the loss of your income for life). When it comes to your ability to earn an income, that’s a great trade to make.

So, yes. The bottom line is you need disability income insurance. Be a careful shopper.

Talk to a qualified agent. Ask a lot of questions. 

And to make sure you’re asking ALL the other right questions, email me at bmoore@argentadvisors.com. I’ll send you my free list of “30-Something Questions for People Who are 60-Something.”

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

This is what’s called a “single premium immediate annuity” (SPIA). It’s essentially a form of insurance. 

To the recipient, it works like an employer pension plan. When you retire, the SPIA, (technically, the insurance company) pays you a set amount per month for life. Or, in some cases, as long as you and/or your spouse live.

How can they do that? The obvious question is “How can a company afford to do that?” After all, some people live a LONG time. 

I spoke with a client recently who is in his early 90s. His beloved grandmother lived to be 102. She was born in 1854…meaning she lived through the American Civil War!

Insurance companies don’t fret over clients who live a long time. They know if you gather a large enough group of people, you can reliably calculate how many of them will live to a good old age, die early, or reach average life expectancy.

In other words, when an insurance company calculates SPIA payments, it isn’t thinking of one person, but thousands. 

How SPIAs work. Retirement is when workers need to turn their 401(k) and IRA assets into income. SPIAs can be an option that provides certainty unavailable from the stock and bond markets, which are often volatile. 

Here’s an example: Janet Jones is about to retire at 65. She stands to get about $1,000 from Social Security each month. She knows she can’t make it on $1,000 per month, but fortunately she has $250,000 in retirement savings. If she were to withdraw a conservative 3% of her savings annually (i.e., $7,500) that would pay her $625 per month.

Janet knows she can’t make ends meet on $1,625 per month! She also remembers some negative investing experiences. She’s scared to put all her assets into the stock market—and try to live off the profit. What if the market goes south for an extended period? 

After hearing about the SPIA option, Janet finds an insurance company willing to take her savings and guarantee her $1,405 per month for as long as she lives. 

This sounds great until Janet wonders, “What if I die early? Suppose I only get two checks for $1,405 and then I die? The insurance company would have taken my $250,000 and given me only $2,810. No thanks!”

Other options.

Janet has some other options.

If she agrees to take a lesser amount—$1,379 per month for life—she can get a guarantee that if she dies before ten years are up, a beneficiary named by Janet will get the remainder of those $1,379 monthly payments until ten-years’ worth of payments are made. 

That guarantee means Janet and/or her beneficiary will receive at least $165,480 worth of payments. And if Janet lives to age 102 like my client’s grandmother, she’ll ultimately get over $600,000.

Janet could also choose another option that promises to pay $1,260 per month for as long as either she or her spouse is alive.

A few caveats:

• Understand, when you buy a SPIA, your money is gone to the insurance company—you’ll never get that lump sum back. What you will get back is a guarantee that as long as you are alive (or possibly longer, depending on the option you choose), you or your spouse will receive an income. 

• All of the numbers here are from a single, middle-of-the-road insurance company. Remember: It’s the insurance company that guarantees a certain income, not a government entity. 

• Understand, your SPIA’s monthly payments will not be increasing (unless you pay extra for the privilege), so inflation may present a problem.

• Always work with a financial pro and shop around for the best deal.

SPIAs can be an important piece of the retirement income puzzle for many Baby Boomers. But it should not be the only piece, and they aren’t right for everyone.

But if you find yourself short on dollars and safe options, you should at least give a SPIA a close look.

Columns like this trigger lots of financial questions. Make sure you’re asking all the right ones. Email me at bmoore@argentadvisors.com and I’ll send you my free list of “30-Something Questions for People Who are 60-Something.”

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

When Tim’s dad had open heart surgery, the family was told there was only a 3% chance of anything going wrong.

But in the days following the procedure, Mr. Berry suffered a stroke. “His mind was wiped out,” Tim told the Asset Protection Society (www.assetprotectionsociety.org). 

“Literally wiped out. He no longer remembered the year, his wife’s name, that he had children, or even his dog’s name.”

When the hospital discharged Mr. Berry, Tim did his best to help his stepmother make the transition as smooth as possible. 

But a month after surgery, Tim’s father couldn’t move from his bed to a chair next to his bed without help. The family had to hire a home health care provider service.

The Berrys were told they’d be charged “$30/hour for the normal help, and $90/hour if we needed a nurse. (Nurses are required for tube-fed patients like my father). The bill for a week’s worth of services was $1,980. You can do the simple math: That is over $100K a year. What a screwed-up situation. You want to provide the best for your family, yet you have to factor in the money situation as well.”

In the midst of this all-too-common tragedy, Tim learned three lessons:

1. Buy long-term care insurance. “For the longest time I pretty much thought long-term care insurance was a scam,” Tim says. “I am now a true believer and will preach its benefits to anybody who asks. Don’t think about it, go out and purchase a policy.”

2. Make sure the insurance company has good customer service. Tim requested a copy of the actual contract to review. The company told him it would take up to seven weeks to get it! Not much help when time is short. Make sure your company (or agent) will be there when that time comes.

3. Get your estate in order. Tim’s father was no financial neophyte. After a career as a Navy pilot, he was a commodities broker. 

“So, picture this if you will,” Tim says. “A man knows he is going to have open heart surgery. He knows of the legal implications of having assets in America. He knows there are tax implications to being married to a non-US Citizen. (His wife is Norwegian). He had also just sold some family land via an installment note for over seven figures. Guess what steps he/they had taken to plan his estate? He had a sixteen-year-old will, and my stepmother…didn’t even have a will. Apparently, they had gone to a local attorney to have some documents drawn up, but they never got around to getting back to the attorney.”

Tim’s experience also highlights the need for properly drafted powers of attorney. Make sure all the applicable banks and brokerage firms have approved your POA forms, as having them rejected on a technicality is the last thing you need during a time like this.

“I used to always joke with insurance agents about the corny line of a life insurance policy being ‘the greatest love letter you could ever write your family,’” Tim says. “Now that I’ve gone through this experience, I truly believe a long-term care policy, as well as properly setting up your estate, are the greatest love letters you can write your family.”

Remember to use experienced and licensed agents when dealing with insurance and attorneys when dealing with legal matters.

“Don’t push tough decisions upon your family when they are going through emotional turmoil, give them clear-cut guidance and direction as to exactly what your wishes are,” Tim advises.

He adds this P.S. “My father has been home for a little over a week…we have attendants eight hours a day.”

Stories like Tim’s never fail to spark important financial conversations. Make sure you’re asking all the right questions. Email me at bmoore@argentadvisors.com and I’ll send you my free list of “30-Something Questions for People Who are 60-Something.”

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

I’ve got some money I’d like to leave to my grandkids. I want it to grow, but I’m not comfortable putting it at risk in the market. Meanwhile, safer investments like CDs seem like they’re barely keeping up with inflation. Do you have any suggestions?

It’s a classic case of competing demands. We want the growth that comes with risk, AND we want the safety that comes with conservative investing. Just the other day I had a guy tell me (smirking), “I just want steady ten percent returns, with no risk of loss.” 

(Right. And I want delicious ice cream that makes me lose weight.)

Investing doesn’t work that way. We can’t have massive gains and guaranteed safety too. But there may be a middle ground that’s attractive.

If you’re a CD person, you’ve probably been bombarded with sales pitches for tax-deferred annuities. These are accounts set up by insurance companies. You can set aside money for retirement, and one day it can be turned into a stream of lifetime income. 

The problem with most annuities? Most have large surrender fees. If you change your mind, or suddenly need your cash…or if interest rates jump and you want to move your money back into a CD with a better yield, you can’t do it the first few years without paying substantial penalties. It is common for annuity surrender penalties to last seven or more years. Some may be shorter, many are longer.

While most folks have heard of tax-deferred annuities, not many know about the lowly modified endowment contract (MEC). A MEC is also an insurance company instrument. It’s essentially a whole life policy stuffed with cash.

Because insurance companies don’t have the short-term liquidity requirements of a bank, they can often make longer-term investments, which in turn pay a slightly higher yield. This can translate into a higher return than one would get with a CD. (Obviously, the details on a MEC can vary, or change quickly, so you need to talk with an expert and get all the facts before doing anything.)

Like an annuity, MEC funds are tax deferred while left in the contract. And there is a federal government tax penalty for early withdrawal if you take money out before age 59 and a half. For that reason, a MEC is typically most appropriate for folks over that age.

Unlike an annuity, with a MEC the ability to get to all of your money comes much quicker, as in the second year. 

There is also a death benefit attached, so that proceeds pass income tax free to your heirs. Because of the death benefit, you have to go through a physical underwriting process to qualify for a MEC. My experience, however, is that most reasonably healthy older adults qualify. Again, talk to a trusted, licensed agent to learn all details.

Here’s an example of how a MEC can work. Suppose a reasonably healthy 65-year-old man puts $100,000 into a MEC. If the man died the day after the contract was in force, his beneficiaries would receive $175,000. 

Or, if he changed his mind, he could cancel the contract and get back his $100,000 plus some interest by the end of the second year. If he let the money grow and reinvested the dividends, his $100,000 would grow to about $150,000 ten years later, assuming current dividend rates. That’s about a 4% annual rate of return, with no taxation and no market risk. And the death benefit, according to current dividend yields, would have grown to $220,000 in the tenth year. Dividends, of course, are not guaranteed.

The same $100,000 placed in a 5-year CD might get close to 0%…or as high as 4.5%, depending on which bank you use. That is a huge spread, but that’s the rising interest rate environment we’re in right now. Penalties for early withdrawal vary from bank to bank.

MECs are more trouble to set up than CDs. They aren’t right for everyone. But for a long-term saver, looking to maximize returns for you and your loved ones, a MEC is certainly worth investigating.

If you’re like most people, when it comes to things like MECs, you’re not even sure what questions to ask! No worries. I’ve already done that for you. Email me at bmoore@argentadvisors.com and I’ll send you my free list of “30-Something Retirement Questions for People Who are 60-Something.”

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

Eager audience members would scream wildly, pleading with Monty to pick them to play the game. Once Hall had chosen someone to play, announcer Jay Stewart would bring down what looked to me like a TV dinner trey with a small package on it. 

Then, Monty would give the contestant the opportunity to keep the little mystery in the small package on the TV dinner trey, or trade for some hidden something behind (you remember) door #1, door #2 or door #3. Those were the doors beside which stood the beautiful Carol Merrill. 

Well, it’s time for you to play Let’s Make a Deal. Only you’re going to get to see behind each door…sort of.

Your choice is between two jobs. But you don’t know how each job will turn out. 

Your first choice is to work in a job in which you make $98,000 as long as you are well. The American Council for Disability Awareness says a guy in his mid-30s has a 1 in 5 chance of being disabled for more than 3 months during his working lifetime. Of those 1 in 5, one third of those will still be disabled five years later.

So, this job says if you happen to be one of those unfortunate ones who become disabled, you can still make $60,000 per year tax free. 

Your other choice is to take a better paying job – $2,000 per year better. Instead of making $98,000 per year, you make $100,000 per year. So far so good.

But in this job, if you get disabled, you get nothing. Zero. Zip. Nada. Your income goes to zero.

Hey, people play the lottery every day, so I’m sure there would be some who would pick the second job. But I wouldn’t say that was the smartest move they ever made. 

The 2% upside is hardly worth the risk of the 100% downside. 

Yet that may be the very choice many are making. Disability is a real deal and it can be financially devastating. Just ask yourself what would happen if your paycheck suddenly stopped with no prospects of it ever starting up again.

For someone in their 30s, it might cost anywhere from 1% to 3% of their salary to pay for high quality disability insurance, if they could get it at all. It gets more expensive the later you wait to buy it. But then again, you also become more likely to need it the older you get.

Take a look at it from another angle: Same $100,000 income. I tell folks they need to save 15% per year. If you saved $15,000 per year and made 5% annually, it would take you 30 years to have $1,000,000. 

What if you spent 2% on disability insurance and only saved $13,000 per year? In that case, assuming the same investment return of 5%, it would take you 32 years to have the same $1,000,000.

In reality, just a little discipline would enable you to save the $15,000 and have the disability coverage.

The cost of protection is small no matter how you look at it, either in dollars or in time.

But the cost of not being protected is so high as to be nearly impossible to calculate. 

Trust me…no protection is not a good deal.

To help you think through such issues, I wrote a book. It’s called “How to Put Your Money Worries in the Rear View Mirror – The Financial Freedom Roadmap.” This book is for anyone trying to figure out how to become financially free without having to earn a PhD in finance. It’s free if you’d like a copy. Just email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

My lime green nylon shirt sported a lion’s head on the back. My ensemble was made complete with platform shoes and a puka shell necklace. Oh, and I should mention my hair—blown dry and sprayed into place, so that it resembled a helmet. 

On prom night, I was a living, breathing fad as I danced to “Stayin’ Alive.”

(At least my photo from that evening has provided my children endless hours of laughter.)

What was I thinking? Who would dress like that—on purpose? 

That’s what fads are like. “Everyone is doing it!” and “it” is that trendy, buzz-generating cultural craze. 

Remember Cabbage Patch Kids, aerobics classes, Rubik’s Cubes, lava lamps, and pet rocks? They were everywhere. Then—poof!—they were gone. Because they were…fads.

Guess what. The world of finance has had its share of fads too.

• In the early 1980s the stock market was supposedly “dead” and universal life insurance was going to make policy holders rich. 

• By 2000, tech stocks were “destined” to keep going up. Until they didn’t.

• In 2005, lenders were practically throwing mortgages at people with no income and terrible credit histories on the belief that home prices “always” go up and “never” fall. That is, until reality came crashing down.

• In 2008, Wall Street learned how to bundle together junk-mortgages, call them “collateral debt obligations” and hang a AAA rating on what was really financial garbage. Until that sketchy practice brought on the Great Recession.

• In recent years, we’ve seen the rise and fall of crypto, Bitcoin, Robin Hood, and a host of so-called meme stocks.

Financial fads (like all fads) are long on enthusiasm and energy, and short on verification or wisdom. Social media can make them go viral quickly. Especially when they promise outsized outcomes that are easy, fast, and practically certain.  

History, however, puts the lie to most financial fads.

The stock market wasn’t dead in the early 80s. In fact, it has grown from under 1,000 to over 30,000 (as measured by the Dow Jones Industrial Average). Through all the ups and downs, that’s about an 8.5% average annual return. 

The pessimism of the early 80s was replaced by the “irrational exuberance” of the late 1990s. By the time the Internet bubble burst, the NASDAQ had reached 5,000. It would fall over 60% and take 15 years to regain that loss.

To be sure, not every faddish thing is evil or illegal. As with many lies, most financial fads contain a kernel of truth. 

The real problem with these fads is that they distract you from doing what works. They tempt you instead to try something that sounds easier, faster, or more fun. Hey, next to a flashy fad, whatever is tried-and-true often feels boring! 

But the truth remains: The formula for long-term financial health hasn’t changed much in the last 100 years: 

• Create a financial plan. 
• Fund the plan by saving and investing enough money. 
• Protect the plan by obtaining enough insurance. 
• Maintain the plan by regularly revisiting and updating it.  

For many, DIY (“do-it-yourself”) financial planning is a new fad. 

Yet few people have the time to gain expertise in multiple fields. I might think I’m saving money by doing my own plumbing, wiring, legal work, or dentistry. But typically such thinking leads to frustration and greater expense. 

Getting swept up in cultural fads like leisure suits and disco dancing might hurt your pride a little. But falling for the latest financial fad can negatively impact you for years. 

If you have questions about your own financial plan, I’d love to send you my comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.